The Financial Services Authority (FSA) has confirmed that retail investment advisers will be required to hold a Statement of Professional Standing (SPS) if they want to give independent of restricted advice after January 2013, in an attempt to restore consumer confidence in retail financial advisers.

Every year inappropriate or badly sold investments cost consumers between £400 and £600 million, according to the FSA.

The FSA’s Policy Statement on the Retail Distribution Review (RDR) requires higher qualifications among financial services employees, but also requires firms to closer monitor their employees’ competency levels.

However, the deadline of 2012 for the new standards could be a problem for some advisers, leading to a shortage of qualified advisers and reducing consumer access to advice, warned the Financial Services Skills Council (FSSC).

“For advisers transitioning from an existing QCA level 3 to the newly required level 4 qualifications, the FSA must ensure a transparent and consistent process,” commented Sarah Thwaites, deputy CEO at the FSSC. “For existing advisers who need to gain the new RDR level 4 qualification, a transition period under the supervision of an appropriately qualified individual post the 2012 deadline could allow advisers to work while achieving the new standards and prevent a shortage of qualified ones. We await with interest the publication of the Policy Statement and its sound aims of professionalism to benefit consumers.”

The review is expected to cost around £1.5bn over five years to implement, although details of how much of this will be passed on to customer is yet to surface.

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